The Big Lie: A Follow-up

Joe Nocera, a NY Times financial columnist and co-author of All the Devils are Here, my favorite book on the financial crisis, has just published a column that fills out the Wallison/Pinto argument that Fannie and Freddie were behind the entire financial crisis. In his original (and very good) column on the government's official report on the financial crisis, he dismissed Wallison's singular dissent as a as a “lonely, loony cri de coeur”, a description for which (not surprisingly) Wallison took exception.

Now the SEC has filed suit against Fannie and Freddie for making “materially false” statements about the size of the companies’ investments in subprime mortgages. Nocera makes a good case that the charges are extremely weak. Read the column yourself for the particulars.

Nocera concludes the column with this:

After the S.E.C. filed its charges on Friday, I received an e-mail from Wallison, suggesting that the complaint proved that he had been right and that I had wronged him. I now concede that he is half-right. Loony though his theory may be, he’s sure not lonely anymore.